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Accountancy bodies welcome ‘Making Tax Do-able’ announcement

19th Jul 2017
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Accountancy bodies have given a cautious welcome to last week’s announcement that the rollout of Making Tax Digital (MTD) for smaller businesses is to be pushed back to 2020.

The statement from Paymaster General Mel Stride confirmed that while organisations above the VAT threshold will have to start filing with MTD-compatible software from April 2019, small businesses below the threshold will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.

While software developers gave a mixed reaction to news of the delay, at some stage most of the professional accountancy bodies had expressed concern about a range of issues surrounding the project, and so the new timescale was broadly welcomed.

ICAEW

Commenting on the delay Paul Aplin, ICAEW Deputy President, said: “It’s great that the government has listened to both the voice of business and the profession on Making Tax Digital (MTD). Removing mandation for the smallest businesses is a welcome step forward and is one less regulatory burden for SMEs to worry about.”

MTD timetable

The Chartered Institute of Taxation (CIOT)

The news was also applauded by the CIOT, who believe that the delayed digital start date will make for better implementation. John Preston, CIOT President, said the body was delighted that the government appears to be “basing its approach on coaxing” rather than “compelling businesses” into going digital.

“This deferral will give much more time for businesses, supported by their advisers, to identify for themselves, at their own pace, the benefits of digital record keeping,” Preston said. “It will also ensure that many more software products can be developed and tested before mandation is reconsidered.”

Association of Taxation Technicians (ATT)

The ATT’s new President Graham Batty welcomed the government’s decision and offered its help in making the new regime more ‘doable’ for taxpayers.

Speaking at his inaugural address last week, Batty stated that the deferral creates “an opening for large-scale voluntary testing of MTD”, followed by a “proper evaluation of outcomes” so that the programme has the greatest possible chance of succeeding.

Batty also called upon tax professionals to grasp the opportunity to work with HMRC to devise a version of MTD that is visibly ‘doable’ and works for their clients, the Exchequer and themselves.

The Association of Chartered Certified Accountants (ACCA)

The ACCA’s head of taxation Chas Roy-Chowdhury hailed the news, but also sounded a note of caution that there are issues with the new proposals:

“For voluntary MTD to be available we will still need to have all the legislation in place from the beginning,” he said. “This suggests we may still have the highly compressed initial timetable, although the scope to amend and adjust before it becomes mandatory will be there (provided Parliamentary time can be found).

“There is also still a worry about the timing of VAT reporting, as many of the largest businesses have a two-year lead in time for their software systems to cope with a change of this nature, but we are now well past that cut-off date to start development and we do not even have a consultation document, let alone draft legislation.

“We must not forget the wider landscape – Brexit may fundamentally change the nature of VAT as well, meaning two major changes to VAT systems in short order.”

The Low Incomes Tax Reform Group (LITRG)

Responding to the government’s statement Anne Fairpo, chairman of LITRG, stated that she believes a more measured start to Making Tax Digital will better serve its aims.

“We have always maintained that a change of this magnitude should be well-planned,” said Fairpo. “Preparation for the change should cover at least a full cycle of four quarterly reports and one year-end declaration to leave plenty of time to fix any malfunctions that emerge during the testing and allow users to become familiar with the systems.

“LITRG has been very supportive of harnessing the benefits of technology to make the payment and administration of tax easier and cheaper for both taxpayers and the Exchequer, but strongly believes that a system that is reliable, intuitive and easier to use than any alternatives will quickly attract users whether or not its use is mandatory.

“It will also give HMRC time to develop free software for the smallest unrepresented businesses rather than relying on the commercial market to do so.”

 

Do you feel the reaction of the bodies represents the profession as a whole?

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By SM80
19th Jul 2017 21:42

Has Jim Harra made any comment?

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